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Friends Prov lowers with profits final bonuses

Friends Provident is reducing final bonuses on its with profits fund following a gross investment return of -7.25 per cent for the first half of 2008.

The insurer says there will be no change to regular bonus rates.

Friends Provident chief actuary Brian Harrison says: “Bonus rates announced in January of this year reflected investment returns over the whole term of the contract.

“To maintain payouts at January levels we needed annualised returns of around 8 per cent on longer-term policies. However, the estimated return on the fund over the first six months is minus 7.2 per cent.

“Accordingly, to ensure that we are fair to all customers – not just those with current maturing policies – we need to reduce bonus rates now to reflect the fall in underlying investment values.”

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